Chase turns to Facebook for latest reward

November 5, 2011|By David Benoit, Dow Jones News Service

J.P. Morgan Chase & Co. wants to be liked, and it is willing to pay handsomely for it.

As part of a marketing campaign around its Chase Freedom credit card, the New York bank hosted a sweepstakes for users who "like" the card's page on social-networking site Facebook. The "like" function allows users to signal something they are interested in to other friends and users. The grand prize was $1 million, while $500 was given away each hour from Oct. 3 to Oct. 23.

The push is the latest by a consumer-financial company to try to tap the social-media well, an area where the industry has been slow to adapt. Through sites like Facebook, mobile social network Foursquare and microblogging service Twitter, financial companies are gathering data on new consumer-spending habits. The initiatives have another benefit: helping drive consumers to online services, which lenders see as cheaper and more efficient than branches and paper statements.

Customers visit online accounts more often than branches, and they now are getting more willing to bank on social media, according to Javelin Strategy & Research, a financial research group. In a recent Javelin survey of 5,102 consumers, 12 percent of large U.S. bank customers said they would likely use social media to review accounts if it was an option.

James Van Dyke, Javelin's founder, said banks are struggling to get customers immersed online — away from using both online and paper — but that social media could help. "To get the full return on investment, you have to get people fully online," he said. "You will start to interact through your bank the same way you interact through social media, totally online."

Financial companies have been slow at adapting to social media, but are getting better. Sites also can provide lenders with spending habits through transaction tracking or by getting the customers to self-report what they like.

Sarah Phelps, a payments industry principal at First Annapolis Consulting Inc., said Facebook might not initially reach the same number of people as direct-mail campaigns, but it could help gather different information from customers as they like the social-media pages and open their profiles to the liked firms.

"You have to get into these channels and have to start learning how to leverage them," Phelps said. "You have to basically test and try your way into new marketing."

Capital One Financial Corp. has built a virtual presence for itself on Zynga Inc. games, which are played through Facebook. In CityVille, where players develop a city, the bank has branches while in FarmVille, players earn a special Capital One goat that breeds. Bank of America Corp. has taken to Twitter with an account to help customers.